The Economic Crisis

response 2

by Bertil Falk and Don Webb

[Bertil Falk] Elaine Graham-Leigh points out the importance of sf and its ability to examine systems. And she calls the credit boom “a bubble, and like all bubbles, it burst. That wasn’t a result of ineptitude from the CEOs of Lehman Brothers et al., it was the boom and bust cycle inherent to capitalism.”

True, true, and to me — all of a sudden — the fascinating thing with that statement, which is an old theory, is that capitalism takes on the shape of a Big Bang, expansion; Big Collapse, contraction; Big Bang again, expansion; etc. ad infinitum, in itself a kind of SF.

However, Elaine Graham-Leigh seems to take for granted that this is an irrefutable law, and therefore “the boom and bust cycle” is impossible to prevent. I don’t believe that, even though we have not as yet found a way to avoid the booms and prevent the busts. On the contrary, I think that we are able to solve that problem in a way that turns science fiction into science fact.

And, yes, I am also convinced that Bewildering Stories is a good place for this discussion.

[Don Webb] I certainly hope you’re right, Bertil, that the boom and bust cycle can be controlled. Comparing it to Big Bangs and Big Crunches elevates it to a cosmic, almost mythological status reminiscent of the idea of “eternal return” in ancient Greek philosophy.

In any event, Elaine’s analysis raises a few questions:

“The rate of profit — the ratio of profit to capital invested — inevitably declines, and the capitalist business has to expand to compensate.” — I wonder whether that’s a foregone conclusion. What about innovation and gains in productivity?

Productivity is as productivity does. Gabriel Timar takes it into account and even urges that it be restrained. To borrow one of Gabriel’s examples, the new well in the African village was a technological innovation intended to increase productivity. One would normally expect the well to achieve its purpose, but the villagers soon realized that their own peculiar circumstances were having the opposite effect.

“It’s worth remembering that the 1930s Depression finally ended with World War 2.” — That’s quite true. And Elaine has explained carefully in a side conversation that she does not hold the conservative view that a war was necessary to end the Great Depression.

In fact, the New Deal had been leading the U.S. economy out of the Depression when the Roosevelt administration suddenly got cold feet and tried to balance the budget. The recession of 1937-38 was due to a political loss of nerve.

Elaine and I will agree that the Great Depression had already laid the groundwork for WW2, but we hold that war was not a necessary consequence; recovery was already taking place without it.

“War, like globalisation and boom and bust, is what capitalism does.” — I’m not sure that capitalism inevitably leads to war.

War is not peculiar to capitalist societies alone. In fact, history shows that war is endemic to humanity if only because human beings are territorial animals. In any event, as Terry Pratchett says, “War is a wicked waste of customers,” not to mention capital.

During the Cold War, any study of Marxism was taboo in North America. Joe McCarthy was watching you, and no university dared offer a course on the subject. Now it’s time to revisit Karl Marx; and Adam Smith, too: he held no illusions that the marketplace had any kind of moral worth.

But above all it’s time to review Jane Jacobs’ The Economy of Cities and The Nature of Economies: she had no illusions about either communism or capitalism; rather, she viewed economics as a natural rather than an artificial process.